Repudiation of a Constructing Contract – Addinos v OJ Pippin Houses


Repudiation of a constructing contract happens when one social gathering evinces an intention now not to be certain by the contract.

In a current determination of the District Court docket in Brisbane, Rinaudo AM DCJ handed down a choice discovering that OJ Pippin Houses Pty Ltd repudiated a constructing contract.

On account of the repudiation of a constructing contract, the OJ Pippin Houses Pty Ltd had been ordered to pay Addinos Pty Ltd, by the use of loss and injury, the sum of $159,169.69, plus curiosity and prices calculated on the indemnity foundation.

OJ Pippin Houses Pty Ltd repudiated the contract by sending an e-mail and a textual content message which confirmed an intention to now not be certain by the contract.

Addinos Pty Ltd then accepted the repudiation of the constructing contract and terminated the constructing contract.

What’s fascinating about this case is that the repudiation arose from the allegation that OJ Pippin Houses couldn’t proceed due to the elevated prices within the constructing and development business.

That is topical in a post-COVID19 world due to the sheer variety of builders who’re making an attempt to boost the costs of their fixed-price residential constructing contracts.

This can be a case research of Addinos Pty Ltd v OJ Pippin Houses Pty Ltd [2022] QDC 205 by our constructing and development attorneys.

Background to the Dispute

Addinos Pty Ltd is a property developer. Addinos contracted with OJ Pippin Houses to carry out the next works on the location:

  1. The demolition of a dwelling; then
  2. The excavation, levelling and slicing; then
  3. The development of townhouses on the location.

It’s alleged that by the use of a letter dated 17 March 2016, the OJ Pippin Houses repudiated the constructing contract as a result of they stated phrases to the impact of:

I remorse to tell you that we’ll be terminating your contract. Please see connected letter … Attributable to unexpected time taken to this point we’re now not in a position to construct this venture inside our development schedule or for the prices initially quoted.

The letter contained related wording to the e-mail, it stated:

We write to advise you that OJ Pippin Houses Pty Ltd can be terminating the construct contract for the dwellings to be constructed on the above tackle. The development prices have elevated considerably because the venture was priced, nearly 12 months in the past. The constructing approval course of has been extraordinarily prolonged and we now not have the capability to undertake the works inside our manufacturing schedule…

There was additional proof by the use of a replica of a textual content message from Mr Hastie, the director of OJ Pippin Houses, to Mr Thomson, the event supervisor for Addinos Pty Ltd which learn:

Hello Kevin … Unsure if you’re going to get this however I simply can’t construct this venture sorry mate. We simply misplaced two of our most skilled supervisors and Kelly [Simpson] within the workplace as a result of complexities of constructing these small initiatives. Our prices for these are going by way of the roof with trades charging massive premiums on charges resulting from entry points and so on. that is then inflicting delays in contract occasions and therefore liquidated damages. We now have determined as a enterprise to return to only homes at this state. I actually am sorry for the inconvenience triggered.

On 23 June 2016, Addinos Pty Ltd accepted the repudiation of the constructing contract by OJ Pippin Houses Pty Ltd by sending a letter which stated:

I seek advice from your letter of 17 March 2016 … Each your letter, and your abandonment of the contract and works, every quantity to a wrongful repudiation and breach of the contract. To keep away from the associated fee and expense to each of us related to following the formal termination process below the contract, we suggest … that we agree that the contract was at an finish as at 17 March 2016 on account of your letter … any and all rights now we have below the contract or in any other case (together with however not restricted to any rights to damages) are reserved…

On the time of the termination, the demolition works had been full, however the excavation works and the development works had not commenced.

On account of the repudiation of the constructing contract, Addinos Pty Ltd alleged that it suffered injury and loss.

The Important Points in Dispute

OJ Pippin Houses tried to make use of a variety of defences in opposition to their opponents in defence of the declare.  You’ll be able to see this at paragraphs [56] to [75].

Nevertheless, the one points that had been mentioned by the Court docket on this determination had been:

  1. The alleged correct social gathering defence.
  2. The termination of the contract.
  3. The extension of date for sensible completion
  4. The repudiation of the constructing contract by the Plaintiff.
  5. The losses and damages.

We are going to clarify these in additional element beneath.

The alleged Correct Social gathering Defence

OJ Pippin Houses argued that it didn’t contract with the plaintiff, however in actual fact it contracted with an entity known as “Addinos Pty Ltd ABN 159 849 584”.  This was alleged to be the ABN of the belief.

Nevertheless, on the proof of Mr Addison (the director of the plaintiff) the Court docket was happy that Addinos Pty Ltd ACN 166 300 349, in its capability as trustee of the Addinos Discretionary Belief ABN 159 849 584 was the right entity.

The Court docket discovered that this doesn’t have an effect on the legality of the contract, referring to Yara Australia Pty Ltd v Oswal [No 2] [2013] WASCA 187 at [259] the place Pullin JA stated:

The truth that Pankaj was described as trustee of the Burrup Belief within the OSD and the SD doesn’t alter the truth that these deeds had been executed and entered into by Pankaj. The frequent regulation doesn’t recognise a trustee as having assumed an extra or certified authorized persona.

OJ Pippin Houses additionally tried to dispute the validity of the termination of the constructing contract.

The Termination of the Contract h3

In relation to the repudiation of the constructing contract, Rinaudo AM DCJ referenced Progressive Mailing Home Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17, the place Mason J of the Excessive Court docket of Australia said at [33]:

What must be established as a way to represent a repudiation is that the social gathering evinces an intention now not to be certain by the contract or that he intends to fulfil the contract solely in a fashion considerably inconsistent together with his obligations and never in some other method.

See additionally Shevill v The Builders Licensing Board (1982) 149 CLR 620 at 625-6.

In relation to the e-mail, the letter, and the textual content message, His Honour stated at [84] and [87]:

[84] It was submitted, and I settle for, that the message conveys that the defendant didn’t intend to construct the venture due to points solely associated to the defendant, and to not any delay on the a part of the plaintiff.

[87] I’m happy that the defendant had no lawful foundation to terminate the contract on the grounds said by Mr Hastie, and that these communications evinced an intention to now not be certain by the contract.

In relation to the acceptance of the repudiation, and the following termination of the constructing contract, His Honour Rinaudo AM DCJ referred to Cooper v Kinsella [2011] NSWCA 45 at [70].

An act of acceptance of a repudiation requires no explicit type: a communication doesn’t need to be couched within the language of acceptance. It’s adequate that the communication or conduct clearly and unequivocally conveys to the repudiating social gathering that that aggrieved social gathering is treating the contract as at an finish.

His Honour Rinaudo AM DCJ deciding at [88] and [90] that:

[88] I settle for that this letter communicated to the defendant that the plaintiff handled the contract as at an finish.

[90] Accordingly, I discover that the defendant repudiated the contract by emailing the connected letter dated 17 March 2016. I discover that the plaintiff accepted the defendant’s repudiation of the contract by letter dated 23 June 2016.

In an try and mitigate the quantity of damages and curiosity, OJ Pippin Houses claimed that they had been entitled to an extension of time for sensible completion.

The Extension of Date for Sensible Completion

Within the defence, OJ Pippin Houses claimed:

  1. Curiosity ought to be decreased primarily based upon the idea of the nominal Date for Sensible Completion being prolonged to twenty November 2016, at [60].
  2. There ought to be no quantity for prices in Annexure D, on the idea that the defendant couldn’t have accomplished the constructing works any earlier, or within the various, on the idea of a nominal Date for Sensible Completion being prolonged to twenty November 2016, at [63].
  3. In respect of quantum, Sensible Completion ought to be a minimal of 20 November 2016. Due to this fact, no quantity for curiosity ought to be allowed on Annexure A, C and D, and an quantity of $8,542.06 solely ought to be allowed for Annexure E, at [66].

OJ Pippin Houses Pty Ltd claimed that it was entitled to an extension of time for the date for sensible completion pursuant to clause 22 of the constructing contract, due to delay by:

  1. an act of prevention by the Proprietor not in any other case coated by this clause; or
  2. some other matter, trigger, or factor past the management of the Contractor.

OJ Pippin Houses Pty Ltd claimed that they had been entitled to assert seven (7) months and 12 days, being from 5 August 2015 to 17 March 2016.

The constructing contract additionally said that to assert a delay pursuant to clause 22(a), it should give a written discover to Addinos Pty Ltd stating:

(i) the reason for the delay;

(ii) the time throughout which the finishing up of the Works was delayed; and

(iii) the extension of the Date for Sensible Completion that the Contractor claims on account of the delay,

Inside 28 Days after the Contractor turns into conscious of the conclusion of the delay or 21 Days after Sensible Completion, whichever is the sooner.

His Honour Rinaudo AM DCJ referred to 2 instances in relation to the declare for an extension of time due to delay, Opat Adorning Service (Aust) Pty Ltd v Hansen Yuncken (SA) Pty Ltd (1994) 11 BCL 306 and Australian Growth Company Pty Ltd v White Constructions (ACT) Pty Ltd (1996) 12 BCL 317 (unreported).

The Opat case was an attraction of the choice of Mohr J who was reviewing a choice of an arbitrator who stated that:

In my view the giving of the required discover and particulars below Clause 31(b) or adopting the process set out in Clause 47, neither of which the sub-contractor did, are pre-requisites for the granting of extension of time besides within the circumstances of Clause 31(e) and (g) and the arbitrator was appropriate in so holding.

Within the Opat case, Bollen J with Prior and Duggan JJ agreeing, dismissed the attraction by Opat and agreeing with Mohr J.  The Court docket stated at [34]:

I respectfully agree with the arbitrator and with Mohr J in regards to the which means and operation of Clause 31(b). It’s a necessary provision. I agree, with respect, that Mohr J is appropriate in his interpretation of Clause 47 though I don’t suppose that issues.

Within the Australian Growth Company (ADC) case, Giles CJ held:

Imposing the notification requirement upon ACT was a deliberate and essential a part of the mechanism for figuring out the time by which the date for sensible completion ought to be prolonged. It was in necessary phrases (“shall notify”) equal to the necessary phrases imposed on ADC … In my view, due to this fact, within the absence of well timed notification as required by article 4.4.1 ACT was not entitled to extension of the date for sensible completion.

Within the current case, following these instances above, His Honour Rinaudo AM DCJ discovering at [93]:

In accordance with Clause 22(b), the contractor should give the proprietor a written discover of the delay. I settle for that compliance with Clause 22(b) is a situation precedent to the defendant’s entitlement to an extension of the Date for Sensible Completion.

Due to this fact, OJ Pippin Houses Pty Ltd had been unable to mitigate their publicity the damages, prices, and curiosity in the way in which that they supposed.

There was additionally a declare that the plaintiff repudiated the constructing contract.

The Repudiation of the Constructing Contract by the Plaintiff

In paragraph 39 of the defence, OJ Pippin Houses Pty Ltd pleaded at [98] that:

…by its extreme and unreasonable delay and failure to acquire the requisite approvals in a well timed style, and by its failure at any time to acquire the development approval for the rest of the Works over and above the partial approval, and additional or alternatively by making no or no cheap efforts to acquire the requisite approvals in a well timed style, the Proprietor:

(a) breached its obligation below annexure C to the Constructing Contract to acquire the requisite approvals;

(b) breached its obligation below the Constructing Contract to co-operate in doing all issues essential to allow the defendant to benefit from the Constructing Contract;

(c) indicated that it will carry out its obligations below the Constructing Contract (if in any respect) as, when and the way it noticed match, with no regard in any respect for the well timed finishing up of such obligations in order to progress the venture;

(d) evinced an intention now not to be certain by the Constructing Contract, and repudiated it (“the Proprietor’s repudiation of the Constructing Contract”).

The courtroom needed to reply a comparatively easy query, specifically – did the plaintiff resign its obligations below the contract by evincing an intention to now not be certain by the contract, and/or alternatively, is there proof that demonstrates that the plaintiff supposed to fulfil the contract solely in a fashion considerably inconsistent with its obligations, and never in some other method?

Find that there was no proof to help these allegations as pleaded, the query might solely be answered in a single (1) method.  His Honour Rinaudo AM DCJ discovering at [103]:

I discover, due to this fact, that the plaintiff didn’t repudiate the contract by purpose of its delay in acquiring the Demolition Approval, Plumbing Approval, and Constructing Approval.

The Court docket additionally mentioned the quantum of losses and damages.

Losses and Damages for Repudiation of a Constructing Contract

OJ Pippin Houses Pty Ltd made arguments that Addinos Pty Ltd “was or fairly ought to have been conscious that the works had been going to price greater than initially agreed” and the argument above in relation to delay and the extension of the date for sensible completion.

In response to those declare, His Honour Rinaudo AM DCJ determined at [105] to [107] that:

I’m happy, on the proof, provided that the contract was for a hard and fast lump sum, that the plaintiff would don’t have any purpose to contemplate that the Works had been going to price greater than initially agreed.

The Date for Sensible Completion within the contract was 26 June 2016. The date was by no means prolonged, and no request to increase the date was ever made.

I’m happy that:

(a) The plaintiff’s loss and injury “pretty and fairly thought-about naturally come up[s] from” the defendant’s repudiation of the contract;[89]

(b) The causal hyperlink between the defendant’s repudiation of the contract and the plaintiff’s loss and injury was not severed by a novus actus interveniens, aside from the extra CJN Constructions works; and

(c) The plaintiff’s loss and injury movement, within the standard course of issues, from the defendant’s breach.

The Court docket then made the next orders:

  1. Judgment be entered for the plaintiff;
  2. On account of the defendant’s repudiation of the contract, the defendant pay the plaintiff, by the use of loss and injury, the sum of $159,169.69, plus curiosity and prices;
  3. The defendant pay the plaintiff’s prices of and incidental to the continuing (together with reserved prices, if any) to be assessed on the indemnity foundation; and
  4. The defendant pay curiosity to the plaintiff within the sum of $35,459.96.

Key Takeaways re. Repudiation of a Constructing Contract

The principle takeaways from this case are:

  1. Builders and/or constructing firm administrators / senior workers – have interaction attorneys early and cease sending all these correspondence by cellphone, letter, e-mail, and textual content message.
  2. By no means say phrases to the impact of “we wish to terminate the contract” or “we don’t wish to proceed with this construct” or “it’s good to pay us $X extra money, or we’re not going to proceed with the construct”. This conduct might be repudiation.
  3. If you’re in search of to make use of the delay clause within the constructing contract, the discover given within the required time, with all the required particulars, is a pre-requisite to acquiring the extension of time, and increasing the date for sensible completion.

For the sake of some hundred or a couple of thousand {dollars}, search authorized recommendation earlier than you’re taking any steps in relation to terminating your constructing contract.

On this case, OJ Pippin Houses Pty Ltd would have saved (most likely) low to mid-six determine judgment with prices and curiosity, had they sought half-hour of recommendation from a solicitor.



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